OT: Bailout Bill

[Chipper]

I'm just curious if there is actually an issue, or merely the way 
accounting for the mortgages work.

http://www.forbes.com/opinions/2008/09/22/treasury-accounting-plan-oped-cx_bw_bs_0923wesburystein.html?feed=rss_author

It seems odd the mortgage backed securities could be worthless when 
there is still a house (plus a monthly payment) backing it.

Ed wrote:
> On Thu, Sep 25, 2008 at 11:21 AM, Nathan <nathan at paysonlinux.org> wrote:
>   
>> On Thursday 25 September 2008 09:43:09 Joshua Zeidner wrote:
>>     
>>>  Hey all,
>>>
>>>    sorry for the OT, but I think the gravity of this situation offsets
>>> the negatives of making this post here.
>>>
>>>    In case you are not aware, congress is currently considering
>>> emergency legislation for a supposed 'bailout' of 700 billion dollar
>>> credit line to the US Treasury in order to provide 'liquidity' to
>>> credit markets in the US and worldwide.  The situation is somewhat
>>> complex, but what I want to explain here is how it relates to things
>>> you may see every day as an Arizonan.  You have no doubt seen more
>>> than one totally ridiculous and imprudent mortgage loan dispensed in
>>> the area over the past few years.  You might have assumed that these
>>> risky loans would be the problem of either the bank or the borrower.
>>> The alarming aspect to these recent developments are that we as
>>> Americans have learned that it is in fact *all of us* that are going
>>> to pay for these bad loans.  Does that sound fair to you?  And it gets
>>> better: when we fork up the 700 billion, houses will not even become
>>> any more affordable.  If you are struggling you will continue to
>>> struggle despite this unprecedented transfer of wealth to the
>>> treasurer.  With 700 billion dollars we could build houses for the
>>> entire country.  This bill amounts to nothing less than robbery.
>>>
>>>    I truly hope that you consider calling your congressmen and
>>> congresswomen and voice your opinion to this bill.  Your real voice
>>> makes a difference.
>>>
>>>    thanks all, and I really hope you call your representatives.  We as
>>> a country have to stop complaining and get involved.  Im not really an
>>> 'activist', Im just a regular American who knows enough about this
>>> situation to know how much of a tragedy it is.
>>>
>>>   you can get the phone numbers here by typing in your ZIP code:
>>> http://www.congress.org/congressorg/home/
>>>
>>>   thanks, jmz
>>>       
>> Hear hear!
>> I could not have said it better myself. Once again, our government has
>> disguised highway robbery as 'helping the American economy'
>>
>> Good OT Josh.
>>
>> nathan
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>>     
>
> The reason we are forking up 700B is not to make houses affordable.
> that will continue to happen over the next 6 months as the housing
> market continues to drop. What you are putting your 700B up for is to
> take mortgages that are in default (after reassembling them from bits
> & pieces) off the books of financial institutions so they don't go
> bust so other financial institutions will again trust them
> (accountants are screwing us here with new rules too). This is because
> 700B is 5% of the mortgage paper out there, which is only a (small)
> part of the ~74T paper these banks have out there in all types of
> contracts (actively traded every day). In 12 to 24 maybe 36 months the
> housing market will again begin to "not move down" the extent of this
> may be driven by demographics, but also there will be a time when all
> this excess inventory will be sold - then the market will come back
> and housing will again be an appreciating market. The Government will
> then be able to sell the paper it bought with the 700B, most likely at
> a profit. The profit comes from buying "toxic" paper at the bottom of
> the market (pennies on the dollar) being "safe hands" through the
> market troubles, and selling the paper (no longer toxic because the
> housing market is back) for many more pennies on the dollar.
>
> This is how all the great fortunes became huge - they come in at the
> bottom of the market - soak up whatever nobody can stand to have and
> wait until everyone wants it again because the sky isn't falling. This
> is result of too much money in the system, too much complexity in the
> market, and a machine that has been creating low to no quality paper
> over - well, since 1999.
>
> From the policy wonk perspective, once you reassemble the pieces of a
> mortgage under one owner (Uncle Sam) you can re-negotiate the mortgage
> without totally abandoning contract law - so the agency created to
> manage this 700B, will be able to "reschedule" the mortgage with a
> stressed home owner - which can't be done today, because nobody can
> find all the parties to the contract, let alone get them all to agree.
>
> That's not to say there aren't real, large institutional crooks who
> are trying to run as many Americans as far into debt as possible - you
> know, just like the ethics of the RIAA.
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